How may a Texas divorce court divide a spouse’s business?

How may a Texas divorce court divide a spouse’s business?

On Behalf of | Jan 6, 2022 | Divorce, Property Division |

In a community property state such as Texas, divorce courts generally presume all assets obtained during a marriage belong to both spouses. If you or your soon-to-be ex-spouse started a business, its value may divide equally during a divorce.

As noted by SmartAsset, a judge could decide to distribute an enterprise as he or she finds fit. A spouse’s health, age and income-earning ability may determine how the court decides to divide a business.

How much of a business may I receive after a divorce?

If you purchased a business with your spouse, the ownership percentage may change after a divorce. You could consider trading your share of the business to keep other marital assets. Protecting an ownership share, however, may require giving up other marital assets or buying out a spouse’s half.

If you plan on taking full ownership of your business, you may need to negotiate an acceptable exchange. The exchange may include either your share of another marital asset or a portion of it.

How may the court decide who keeps a business?

A judge typically reviews assets and financial statements when dividing property. As noted by Brides.com, couples must submit their business’s tax returns and profit and loss statements. These figures may provide a realistic value that could serve as a buyout amount. They may also help to negotiate a trade for other assets.

Business earnings may also factor into child or spousal support payments. If you or your children require financial assistance, the court could consider your income and expenses. Texas courts may order between 20% and 40% of an individual’s net resources for child support.

Some couples choose to draft an agreement during marriage to specify a business as a spouse’s separate property. Without a signed agreement stating separate ownership, a judge generally considers a business as belonging to both spouses.